Asus 2014 Annual Report Download - page 173

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reversed in profit or loss. Impairment loss is recognized and reversed by adjusting the
carrying amount of the asset through the use of an impairment allowance account.
(11) Derecognition of financial assets
The Group derecognizes a financial asset when one of the following conditions is met:
A. The contractual rights to receive cash flows from the financial asset expire.
B. The contractual rights to receive cash flows from the financial asset have been transferred and
the Group has transferred substantially all risks and rewards of ownership of the financial
asset.
C. To transfer the contractual rights to receive cash flows of ownership of the financial asset but
the Group has not retained the control of financial asset.
(12) Lease receivables/ leases (lessor)
An operating lease is a lease that all the risks and rewards incidental to ownership of the leased
assets are not transferred to the lessees. Lease income from an operating lease (net of any
incentives given to the lessee) is recognized in profit or loss on a straight-line basis over the lease
term.
(13) Inventories
Inventories are stated at the lower of cost and net realizable value. Cost is determined using the
weighted-average method. The cost of finished goods and work in progress comprises raw
materials and other direct/indirect costs. It excludes borrowing costs. The item by item approach
is used in applying the lower of cost and net realizable value. Net realizable value is the estimated
selling price in the ordinary course of business, less the estimated cost of completion and
applicable variable selling expenses.
(14) Investments accounted for under equity method / associates
A. Associates are all entities over which the Group has significant influence but not control. In
general, it is presumed that the investor has significant influence, if an investor holds, directly
or indirectly 20% or more of the voting power of the investee. Investments in associates are
accounted for using the equity method and are initially recognized at cost.
B. The Group’s share of its associates’ post-acquisition profits or losses is recognized in profit or
loss, and its share of post-acquisition movements in other comprehensive income is
recognized in other comprehensive income. When the Group’s share of losses in an associate
equals or exceeds its interest in the associate, including any other unsecured receivables, the
Group does not recognize further losses, unless it has incurred legal or constructive
obligations or made payments on behalf of the associate.
C. When changes in an associate’s equity are not recognized in profit or loss or other
comprehensive income of the associate and such changes do not affect the Group’s ownership
percentage of the associate, the Group recognizes change in ownership interests in the
associate in “capital surplus” in proportion to its ownership.